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London open: Stocks nudge lower as investors sift through earnings; Barclays gains
London stocks nudged lower in early trade on Thursday as investors sifted through a raft of corporate news and digested the latest minutes from the Federal Reserve.
At 0830 GMT, the FTSE 100 was down 0.2% to 7,287.87.
Late on Wednesday, the minutes from the latest Fed meeting revealed that a further tightening of US interest rates could be on the cards soon.
“Many participants expressed the view that it might be appropriate to raise the Federal Funds rate again fairly soon if incoming information on the labour market and inflation was in line with or stronger than their current expectations, or if the risks of overshooting the committee’s maximum-employment and inflation objectives increased,” the Fed said.
Lee Wild, head of equity strategy at Interactive Investor, said: “There were no fireworks at the Federal Reserve’s last rate-setting meeting, according to the minutes released midweek, certainly not enough to pull the rug from underneath the global equity rally.
“Of course, there was disagreement, but concerns that ‘many’ Fed members believe rates should rise ‘fairly soon’ are wide of the mark. It’ll only happen if economic strength and ‘incoming data’ demands it. That’s always been the case, and if that means a hike in March, so be it, but there’s no way Trump’s tax reform and ambitious spending will impact inflation that quickly, if at all. We’ll know more when the president addresses Congress on 28 Feb. The hot money’s still on June.”
In corporate news, Barclays was in the black as it said pre-tax profits almost tripled to £3.2bn in 2016, and announced it would close its non-core business six months earlier than previously planned. Profits for 2016 were boosted as although revenues for the year fell 6% to £19.1bn, the FTSE 100-listed bank chopped its litigation and conduct costs down by two thirds to £1.4bn.
Defence contractor BAE Systems was on the front foot after it reported a rise in full-year profit before tax, with revenue and order intake up as defence budgets recover. For the year to the end of December, profit before tax jumped to £1.15bn from £1.09bn the year before, with revenue up to £17.79bn from £16.79bn.
Paper manufacturer Mondi advanced as it posted a 6% rise in pre tax profits to €843m (£715m) despite revenues falling by 2% to €6.6bn (£5.5bn).
Shopping centre owner Intu Properties rallied after it said full-year underlying earnings rose 7% for 2016 to £200m, primarily due to a 3.6% growth in like-for-like net rental income, which was in line with guidance.
Lloyds Banking Group edged higher after the government sold off a further chunk of shares in the bank, cutting its stake from 3.57bn shares to 2.78bn, or 3.89%.
Inmarsat racked up healthy gains on the back of an upgrade to ‘outperform’ by Macquarie, but Halfords slumped as its rating was cut to ‘sell’ by Peel Hunt.
Utility services company Centrica was in the red despite posting a 4% rise in annual adjusted profit, while EasyJet, Rio Tinto and HSBC lost ground as their stock went ex-dividend.
On the data front, the CBI distributive trades survey is at 1100 GMT. In the US, initial jobless claims are at 1330 GMT.
